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Why are Facebook and Amazon afraid of Lina Khan?

Most Americans can’t name the chair of the United States Federal Trade Commission (FTC) – the nation’s antitrust watchdog – because the position normally doesn’t attract widespread attention. But Lina Khan is changing that.

The 32-year-old associate professor of law at Columbia University (currently on leave as she serves in government) has Big Tech up in arms, and the FTC may be poised to take more definitive antitrust action than it has in decades.

Since she was named FTC chair by US President Joe Biden in mid-June, two tech giants — Amazon and Facebook — have filed petitions to have her recused from decisions concerning them.

Khan is set to chair her second open meeting on Wednesday since taking the helm of the organisation.

Here’s what you need to know about the brewing battle between Khan and some of the world’s biggest tech firms.

First things first. What does the FTC do?

The Federal Trade Commission was created in 1914 primarily to “bust the trusts”.

It has since evolved to protect consumers by creating a “vibrant economy characterized by vigorous competition and consumer access to accurate information”.

It is headed by five commissioners, and no more than three can be from the same political party. The FTC now has a Democratic majority.

So what kind of power does it have?

Big power. The FTC can investigate, bring enforcement, and create rules and penalties for violations.

Decisions rely on votes, but as chair, Khan sets the agenda for the agency.

Lina Khan has argued that Amazon is a monopoly comparable to United States railroads at the turn of the 20th century [File: Graeme Jennings/Washington Examiner/Bloomberg]

So who is she?

Khan made her name in 2017 when she published an article called Amazon’s Antitrust Paradox in the Yale Law Journal while still a student. Her article urged that the meaning of “monopoly” be redefined for the digital age.

Why did it need to be redefined?

In the past, trust regulation focused on price. Monopolies would potentially have the power to raise prices, which would harm a consumer.

But as companies like Amazon use cut-rate prices to best the competition, Khan argues that this behaviour is also harmful. Lower prices give it an outsize share of the market, which allows it to influence the economy and create an environment where even competitors must become dependent on Amazon and its platform to succeed.

And how did Khan redefine monopolies?

Khan argued that Amazon was a monopoly comparable to US railroads at the turn of the 20th century. And monopolies are bad because while low prices may make consumers happy in the short term, they are bad for the economy and for individual consumers over the long term because they stifle competition – which can eventually harm innovation – and innovation is what keeps economies competitive.

“The long-term interests of consumers include product quality, variety and innovation — factors best promoted through both a robust competitive process and open markets,” she wrote in the paper.

Did everyone agree with her?

Nope. Critics argue that Amazon’s popularity and low prices should not make the company a target, and Amazon argues that its unique approach creates new opportunities and competition avenues for emerging businesses.

Republican Senator Orrin Hatch branded Khan’s thesis and those who support it as “hipster antitrust”.

Why did US President Joe Biden tap Khan to lead the FTC?

Biden thinks Khan is the woman for the job of reshaping antitrust law and taking Big Tech to task over anticompetitive practices.

Progressive like Massachusetts Senator Elizabeth Warren agree — she called Khan’s leadership of the FTC “a huge opportunity to make big, structural change by reviving antitrust enforcement and f

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